The Natural Resource Curse | John Rustad

Our housing costs are in Canada where we have quite a lot of land. Our housing costs are generally twice what they are in the US, so we're half as wealthy approximately, and our real estate is twice as expensive. And for what? Then the other environmental conundrum that perplexes me about Canada is like, okay, well, people around the world are going to get their energy somewhere, as we can see by the fact that China is building Coal Fired plants at a rate that swamps anything possible, as is India, and of course Africa will do the same thing if the international neocolonialists don't stop them by refusing to lend the money and so forth, which they are. So the developing world is going to develop, and we have absolutely no right whatsoever to put anything approximating a halt on that, because that really means that we're killing the world's poor people and depriving their children of any opportunity. We have no moral right to do that whatsoever.

Okay, so then you might say, well, Canada should be an example, and we could set an example for Green Technology that the rest of the world could adopt. I mean, first of all, no, I don't think we can do that because we're not innovative enough to do that, and it's also very difficult. But also the best rejoinder to that is, well, do you want Europeans, the Japanese, do you want them dependent on the dictatorships that control the oil supply? Or Putin? And do you want them dependent for their energy on jurisdictions that, unlike Canada, are much more lax in their environmental regulations? I mean, one thing you can say about the Canadian fossil fuel industry is that it's arguably the most attentive in the world to environmental considerations. Now, that doesn't make it perfect, but nothing's perfect. So again, I don't understand the objection. It's like, why can't Canada play its proper role as a provider of raw resources to the world?

I have a theory around that, and I mean, certainly there's a lot of the left thinking that's in there, but I actually think, quite frankly, we're also being influenced by other countries. I mean, obviously, look, if Canada is exporting its energy to around the world, then we're not selling cheap energy to the United States. And so there's a very specific agenda. You think about it: we sell our oil down to the United States at a $20 a barrel discount—15 to 20, you know, sometimes more, sometimes less. But what do they do? They take that oil, refine it, and ship it out to the east coast, and so they make money on the arbitrage on this. And so this doesn't make sense to me.

Actually, one of the reasons why I think, you know, should we have that opportunity for government, I actually want to try to create a Canada-wide Free Trade Agreement. It makes no sense to me that I can trade easier with the United States and Mexico than I can with other provinces. We have no sense of who we are as a country; we need to be able to create that sense as a country. So let's start talking about how we actually build trade across this country and have a sense of who we are.

Yeah, well, RPM famously announced that we really have no national identity in Canada, right? So as you and I think that, that's more what would you say an indication of his sense of what constitutes Canada. His belief, that seems to be quite prevalent in the West, is that there's no uniting ethos that defines us as a country. And I mean, it's a preposterous notion and it's unbelievably destructive. You know, I think about it, so 160 years ago, we had the thinking that brought this country together, right? The rail line tied in the country; we had the sense of who we were, you know, based on our identity.

If we were to take the 10 provinces and the three territories today and say, "Let's build this entity called Canada," what would we have to do to achieve that? Right? Well, obviously, you know, trade would be a big part of it, but we'd also have to have a conversation about, you know, where the authorities and powers are, because there's obviously some overlaps and problems we have today. But we'd have to, you know, have that sense of what is it that would bind us, what is it that would keep us together, what is it that would benefit us?

What's the benefit for Atlantic Canada and Western Canada and Central Canada to come together? And this is a conversation we should not be afraid to have as Canadians because this is the best country in the world. I mean, you've done a lot of traveling; I've done a little bit of traveling. I've seen places all around the world. This is the best place in the world. We have everything we could ever want in this country. We have all the opportunity and potential we ever want.

I mean, we're hopelessly managed at all levels in government, but you know, this is why I look at it and think, I don't want to tear this country apart. Let's figure out how we actually strengthen this country, because it can be such a great place. It can be the promise, quite frankly, that it used to be many, many decades ago. We still have all the building blocks to be able to do that.

Well, part of the reason I wanted to talk to you because the podcast has a relatively international audience, and so it's always hard to tell when drawing attention to something that's somewhat more local is useful and interesting to that broader audience. Although it is also quite peculiar and noteworthy that Canadian politics has become of international interest in the last 10 years. That's a real change and there are real reasons for that.

I think that what's happening in Alberta and in British Columbia are particularly emblematic of why Canada has become centered in the international spotlight. It's because those are the provinces where the war between the free market people, who believe in private property and the kind of free trade that allows people to make choices and genuinely lifts them out of poverty—which we know beyond a shadow of a doubt, especially after the collapse of the Cold War, the collapse of the Soviet Union in the 1980s—and the fact that most countries, regardless of how ideologically warped they are, started getting a lot richer when they weren't outright Communists. You really see this battle playing out in Canada in Alberta and in British Columbia.

The battle is between the utopian environment worshippers of the left and their de-industrialization strategy, and people who believe more in an English common law tradition, private property, and the free exchange of goods and services—freedom, in a word, productive freedom. So let’s delve into the situation in British Columbia now. In British Columbia, the Socialists, the New Democratic Party in Canada, have been in power.

How long have they been in power now? In power for seven years? Seven years. Okay, and so in your estimation, what is the consequence of that? Well, when you look at it, I mean, our quality of life has declined. We've lost almost two-thirds of our forest sector. You know, people aren't investing in mining. Nobody wants to invest in this province. I think it was something like 70,000 people left the province last year; a third of British Columbians were looking at leaving. People can't buy a house.

There is this huge problem with drugs and addiction, with their safe supply and decriminalization approach that they've taken, which has just devastated lives and families and communities. And in addition to that, you know, the efforts they're doing with Indigenous populations, First Nations, is actually a direct assault now on private property rights. It's really quite something to see how this is changing in the province, and people are waking up and looking, thinking, "Wait a second, what's really going on here?"

I think that attributes a lot to why the Conservative Party in British Columbia has risen so rapidly. I mean, it’s a party that's the oldest party in BC's history. It was first founded in 1903, but it hasn't formed a government since 1927. It hasn't elected anybody since the 1970s. So this is a party that's been in the wilderness, but because we're coming with a very different approach, talking about this, there is a huge appetite for change to move away from these ideologically driven governments that we have had into something that's more focused, you know, on just the average everyday person.

So, okay, a couple of issues there. So there is this phenomenon known as the natural resource curse. Economists have studied economies all around the world and concluded that polities that are rich in so-called natural resources are not more likely than other countries to be wealthy, and this is a very important finding. Because another accepted truth on the left is that wealth is a consequence, let's say, of natural resources. I don't really believe in the concept of natural resource at all. Air maybe is a natural resource; other than that, fresh water is not a bloody natural resource.

It takes a lot of work to provide a city with fresh water. Many people around the world don't have fresh water, and certainly fossil fuels and so forth are by no means natural resources because you have to discover them, and you have to pump them, and you have to refine them, and you have to ship them. And then you might ask yourself, well, what is all that activity dependent on? My sense is that activity is dependent on a complex social environment and one that's predicated on private property and diligent work and trust.

So the only real natural resource is one of trust. And then the question becomes, how do you set up the kind of high-trust society that enables people to utilize what's right in front of them productively? And this is the war that's going on in British Columbia. Now, you said that two-thirds of the forest sector, for example, in British Columbia has—this reminds me, I just did a podcast on Venezuela, right? A 70% decrease in GDP in Venezuela and one-third of the population—one-quarter of the population actually moved out of Venezuela—like vanished completely, right?

So that's a more extensive form of socialism, but you're seeing something that's the Canadian equivalent in British Columbia: two-thirds of the forest sector. What's happened to the forest sector? Well, what's happened is you've had successive policies that have been brought in by the NDP that have driven up our costs so that we are now certainly by a long shot the highest cost producers. Access to the fiber has been severely restricted because of these policies that have been put in place, and so you've got a combination of not being able to access the wood you need to run a facility.

And the cost is so high that you can't make a go of it, and so companies are just saying, "We're out of here. We're closing our doors. We're leaving." And it’s just—it's wrong. We have— I mean, forest products are the most sustainable; it's the most environmentally friendly product we can be producing. We, as a province in British Columbia, have a tremendous land mass and a tremendous resource of forest opportunity. But it's because of these ideologies and these cost-driven factors. You've got a government, quite frankly, that's more focused on the environmental movement than they are on families and workers and communities and actually providing these products that the world needs.

Well, and it's, it's the— as we pointed out previously too, it's a false environmentalism because forests can be managed properly, and that can also reduce their fire risk, for example, if it's done well. And that it hasn't been done well at all, and there's high fire risk that's blamed on climate change, but it's much more appropriate and responsible to blame it on mismanagement.

And so, and you said a third of British Columbians are thinking about leaving, and that's absolutely staggering because all the opportunity for British Columbia to be as rich as Norway, I would say, is right there in front of people if they're willing to take it. Exactly, and that is, you know, where when you got a government that is running massive deficits—that's borrowing from the future—that has, you know, believes everything should be run by the public service—that's, you know, has no problem trampling freedoms and no problem trampling, you know, the democratic process, you know—and you have a cost structure that is going up and a quality of life that's dropping because you've got low GDP per capita, and people are just saying, "Okay, we're out of here."